Focus On Liability: Warning Signs

Like the wail of a siren, certain questions, statements and situations should immediately sound an alarm for pest management professionals and instantly trigger the appropriate "emergency" response. How pest management professionals respond to the "siren" can in large part determine the extent of their liability, the expense and longevity of the emergency, and manner in which future situations are handled.

Let’s take a look at several warning sirens, and how pest management professionals should respond in order to limit their legal and regulatory exposure, while maintaining good customer relations and observing sound business principles.

WARNING SIREN #1

Out of the blue, your company is served with a lawsuit from a customer for whom you conducted a WDI/O inspection about two years ago. The suit alleges the home has termite damage that you should have seen had it not been for your faulty inspection.

EMERGENCY RESPONSE: After reviewing the file for the relevant WDI/O, immediately call your contact with the insurance company that writes your general liability insurance. Remember, most policies will not provide defense costs or damages if the insured fails to immediately notify them of a lawsuit and a default judgment is rendered. Copy and forward the file to the claims department. After thoroughly reviewing the file and re-inspecting the property, consider contacting the state regulatory agency and request their inspection to shore up your contention that the original inspection wasn’t "negligent." Have the inspecting technician available for interview and/or disposition. Be prepared to write a check for your deductible, and hold your breath.

FUTURE PROTECTION: Keep all of your WDI/O forms on file for as long as possible. Assign the duty of conducting inspections to your best trained and most experienced technicians. Be mindful of the relationship between real estate agents (who request most of the inspections very close to the act of sale) and your company, ever mindful of the enormous liability the issuance of the form creates. Consider conducting the inspections only for homes with a current treatment contract in force (if at all). Learn from your mistakes — WDI/O claims are the most frequent and most expensive types of claims facing pest management professionals.

WARNING SIREN #2

You receive a phone call from a customer claiming that they (and their beloved family dog) were sickened by a pesticide application your company’s technician made this morning. After first leaving Fido at the veterinarian, they are on their way to the doctor and they want to know what you’re going to do about it.

EMERGENCY RESPONSE: Request that any possibly affected "family members" immediately receive the necessary medical attention. Contact the product manufacturer; most have 24-hour, toll-free emergency response telephone numbers. Forward copies of labels and MSDS to health-care professionals. Contact the technician and review the file for the complete treatment history, including the product used, time of application and any warnings of hypersensitive individuals. Contact the state regulatory agency(ies) if required and send notice to your insurance company. Even if Fido expires while in the vet’s care (regardless of the reason for his demise), be careful of promising in this time of loss to replace the dog as the family may want their lovable mutt replaced with an AKC-registered, blue-eyed Siberian Husky with a champion lineage. (Yes, this really did happen to a pest management firm and its insurance company.)

FUTURE PROTECTION: Use non-volatile products where appropriate to avoid risks of inhalation exposure. Review labels and MSDS with technicians and determine exposure risks to pets prior to treatment. Communicate with customers and inform them to remove pets, bedding and food prior to treatment. Make note of the times and dates of applications on service tickets and retain in files. Post local poison control and insurance claims reporting numbers near phones. Obtain lists of hypersensitive individuals, if maintained by a regulatory agency, and circulate this information to technicians. Comply with required posting and notification requirements.

WARNING SIREN #3

A long-time, valued customer whose home has been under a retreatment-only termite control contract for many years calls you after discovering termite damage in a wall when renovating her kitchen. She wants to know what you’re going to do about paying for repairs, and reminds you of her 12 rental homes that you also have "under protection" and all the referral business she’s given you.

EMERGENCY RESPONSE: This is a tough call. You value your relationship with the customer and are wary of the potential damage to your company’s reputation she could cause. You also know the terms of your contract: it provides for no damage repair, period. In short order, personally inspect the home to determine if the newly exposed damage has live termites in it; if it does, you are in a much less secure position as she could claim that your "faulty treatment" resulted in the termite infestation and resulting damage. If no live insects are present, you can assert that the damage is "old" and existed at the time of treatment.

If your customer is reasonable, she will accept your explanation and declination of responsibility. If she insists on your participation, the decision will be based on these factors: the demand of the customer, the cost of your insurance deductible, your recent claims history and possible reluctance to file a (another?) claim, and the seriousness of the threat of losing her business and that of others she can influence. In any event, you should place your insurance company on notice in case the demand for termite damage repair becomes a claim or lawsuit.

FUTURE PROTECTION: Review your current termite control contracts for disclaimer language. Where allowed by the state regulatory agency and current contract law, systematically replace older contracts with contracts that clearly define your responsibilities and obligations. Train salespeople on the promises made by the contract and how to explain contractual terms to the consumer. Talk to your insurance company and assess their knowledge of the pest control industry, the most common sources of claims and its philosophy and attitude in handling them.

Know the claims notification procedures for your insurance company, and when a notification becomes an actual claim for which a deductible is due; some companies are willing to make a file notation without actually opening a claim that will reflect on your loss history. Maintain files with current and expired contracts at least for as long as required by state regulations — for maximum protection, retain for as long as possible, off site if necessary.

WARNING SIREN #4

Your veteran, ace-performing technician calls your cell phone well after business hours and informs you that he has been in an accident in your well-marked company vehicle. He and the other driver dispute fault, both claim injury and an overly cautious deputy sheriff has a hazardous materials unit on the way to the scene.

EMERGENCY RESPONSE: If possible, go immediately to the scene or send a supervisor and bring a copy of the labels and MSDS of all products that are on the vehicle, to diffuse concern by emergency response agencies. At the scene, examine the vehicle to determine if there is a leak of any product and inform the haz mat team and law enforcement of your findings.

Request that the technician and other driver seek medical attention when permitted by law enforcement, and make sure you receive a copy of the accident report when available. If allowed by existing company policy or if requested by law enforcement, inform your technician that he will be subjected to a post-accident test for the presence of drugs and alcohol. Contact your automotive fleet, workers’ compensation and general liability insurance companies of the accident.

FUTURE PROTECTION: Carry copies of labels and MSDS in all vehicles, with copies on file in the office. Update employment handbooks and policies to allow for post-accident drug and alcohol tests and maintain signed copies of employees’ authorization forms in personnel files. Know the respective claims notification procedures of your insurance companies.

Review vehicle-use policies as they pertain to after-hours or personal use. Assign one person to deal with the media and prepare that person for media interviews, including the rehearsal of probable questions and appropriate answers. Carry a comb or hairbrush in your briefcase so that if you are interviewed on camera you look your best.

CONCLUSION. With some preparation, most pest management professionals can protect their businesses by reversing the order of sequential events listed above. By employing the "future protection" tips before having to make an "emergency response" to the inevitable "warning siren," a pest management professional can prevent many emergency situations from ever occurring and can exert control over those situations that may erupt. These protective measures can mitigate the potential legal and regulatory exposure for the pest management company.

In addition, when designing your company’s emergency response plans and policies to provide protection in the future, be sure to consider how your insurance company fits into the picture, its knowledge of pest management-specific claims and what services it can provide you as an insured that will make your business operate more safely, efficiently and profitably.

The author is vice president of marketing, LIPCA Insurance Group, Baton Rouge, La. He can be reached via e-mail at afugler@pctonline.com.